California Court Rules Disability Claim Accrues When Disability Terminates

In Gray v. United of Omaha Life Insurance Co. (United), after working for a southern California television station for 15 years and rising to the position of Vice President of Sales, plaintiff was injured in a car accident. He was completely bedridden for two months and was left with limited use of his limbs and suffered from chronic pain. He attempted to return to work, using a wheelchair part-time, but it was too much for him and he had to have more surgery.

Soon after plaintiff left work, the television station fired him. He only learned from another employee that he had long-term disability coverage through the television station and that United was the insurer. The employer refused to give him a copy of the policy, and he did not receive one until after his attorney filed a suit for wrongful discharge and retaliation. Plaintiff then filed a claim for long-term disability benefits.

When Plaintiff was unable to submit all supporting documentation, United denied his claim on the grounds that he had not timely filed proof of his loss. Gray’s counsel received United’s denial letter on September 30. 2016, and filed this ERISA lawsuit on Monday, October 3, 2016.

United moved for a dismissal on the grounds that the statute of limitations began to run on the date of Gray’s injury in May 2011. Therefore, his claim filed August 18, 2015, was beyond the four-year time limit. The Court disagreed, holding that the correct interpretation is that the “limitations period accrues at the time disability terminates…” not at the onset of the disability.

Timeliness of filing the ERISA lawsuit

Since there is no specific statute of limitations for an ERISA lawsuit, the Court analyzed case law from the Ninth Circuit and the California Supreme Court as well as California statutes and the specific United policy language in order to determine the timeliness of the lawsuit. California Civil Code Section 337 provides a four-year statute of limitations for actions based on written contracts. Applying that law, Gray’s ERISA lawsuit was timely, having been filed just three days after United denied his administrative appeal.

Timeliness of Filing Claim for Disability with United

United also argued that since Plaintiff was injured in May 2011, and did not file his claim for disability until August 18, 2015, the claim was filed more than four years after the onset of the disability so was time-barred. The court applied California Insurance Code 10350 which provides in relevant part, when “the Group Policy’s terms are less favorable to Plaintiff than the statutory language,” the statute “will override the terms of the Group Policy.”

The Court noted that under Section 10350.7, “proof of loss is not due until the termination of the period for which the employer owes benefits.” This means that a claimant can submit proof of loss at any time until he is “no longer disabled,” or “no longer eligible for long term disability insurance under the relevant plan.” Since Plaintiff “suffers from an ongoing disability,” the statute of limitations for him to provide proof of loss did not begin to run until United denied his appeal, which meant he was no longer eligible to receive benefits. Since this occurred “mere days before Plaintiff filed his complaint,” his action is well within the four-year statute of limitations.

This case was not handled by our office, but we hope it is instructive to those faced with their insurer’s attempt to dismiss their disability claim as filed beyond the statute of limitations. If you have any questions about this case, or disability claims in general, contact one of our attorneys at Dell & Schaefer for a free case evaluation.

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Jim F.

My employer offered both Short Term Disability and Long Term Disability insurance as optional benefits among others. The premiums were significant, but since they could be payroll deducted I felt they could be reasonably managed and the security of continued income in the event of a medical disability was well worth the investment. As with the purchase of a first aid kit, most would prefer never having to use it.

I have been very fortunate to have had few illnesses or injuries throughout my life and more specifically my 45 year career as a healthcare professional. It wasn’t until early in 2012 that I was diagnosed with a chronic, progressive disease of the eye. Symptoms were minimal at that time, though regular visits to a retinal specialist, including regular therapy by ocular injection, were necessary to slow its progression, the symptoms did not appreciably interfere with my work. In spite of my treatments the condition continued to progress. In early 2014 the symptoms began to interfere dramatically with my day to day duties. My job required significant computer use and the reading of copious amounts of medical documentation. It became evident to me that I could no longer meet the expectation of my management and clinical position without working frighteningly long hours and enduring the relentless eye strain and other symptoms related to the illness.

Though I had always planned for eventual retirement from my full-time position, like most professionals I had hoped to be able to continue to practice my profession on a part-time basis throughout my retirement as long as I remained competent and able. That was not to be. Thankfully, I had the foresight to elect the disability benefit options offered by my company and have the premiums payroll deducted for many years. I notified my supervisor and HR representative that I had to stop working due to my condition and proceed with the disability application process.

All went very well and after using up my accrued vacation and sick time, my short-term disability benefits commenced. Since my condition is progressive and incurable I felt secure in knowing that once my short-term benefits were exhausted my benefits would continue under the long-term policy. However, much to my surprise, after receiving about a month of benefits I received notification from the insurance company that a decision had been made to terminate my benefits due to lack of objective medical evidence to support my claim, though significant documentation had been provided by my retinal specialist.

I was bewildered and unsure of how to proceed with an appeal of that decision. Since I had 180 days to do so, I decided to research the matter thoroughly. In spite of my being a veteran healthcare professional everything I had been reading on the subject cautioned about attempting to proceed with an appeal on my own. Legal representation was highly recommended.

I then began a review of local attorneys, hoping to find one that provided enough documentation on their website that indicated experience with non-social security disability related cases. I was also interested in seeing evidence of some experience with disability cases related to diseases of the eye and resultant vision impairment. I was unsuccessful.

So I expanded my search to include national law firms. It was then that I discovered Dell & Schaefer. After thoroughly reviewing their website, watching many of the video discussions, noting experience with vision related cases, particular documentation related to the insurance company that handled and then eventually denied my benefits, and reading a significant number of testimonials, I decided to request a free consultation as advertised. It was one of the best decisions I have ever made.

After that consultation, I was very confident that I was in very skilled hands which alone reduced my anxiety level immensely. Attorney Alexander Palamara and his Legal Assistant, Kathleen Bordes, immediately began managing my case, their professional expertise clearly evident.

They worked closely with my retinal specialist, my optometrist and the insurance company in compiling the medical documentation necessary for a successful appeal in an amazingly short period of time, keeping me fully informed all along the way. Shortly after being notified by the insurance company that my benefits would be reinstated and paid through the full term of my short-term policy I received a lump-sum payment.

Once the short-term disability appeal was successfully completed, Alex and Kathy immediately addressed the long-term policy benefits. Again in a remarkably short period of time I was granted those benefits, receiving a lump-sum payment for benefits to date and will receive a payment monthly going forward per the terms of my LTD policy.

I am extremely pleased with how my case was handled and the very favorable outcome. Alex and Kathy were a delight to work with and extremely professional in every way. Incidentally, the fee I paid to Dell and Schaefer for their incredible representation was very reasonable and very well earned.

I highly recommend the services of Dell & Schaefer to anyone who may find themselves in a similar disability-related situation.

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